What Should Restaurants Look for in a Payment Gateway?

restaurant online payments

What’s your gut-reaction answer to the following question? 

What is the most important decision a restaurant owner has to make in 2020?

If you said “picking an online ordering platform,” “establishing safety protocols,” “redoing the menu based on new supply and demand,” or “reallocating staff resources,” you wouldn’t be alone. Many restaurant owners are facing serious decisions when it comes to orders, safety, their menu, and their employees.

But we’d like to add another answer to that question. It might not be quite as obvious, but it’s just as critical as the answers above.

Picking a payment processor is one of the most important decisions a restaurant will make. Every charge fee affects your restaurant’s bottom line. Every charge itself involves your customer’s data, which is, of course, vital to protect.

In this article, we’ll look at a few key criteria for selecting the right payment gateway for your restaurant. We’ll then consider some popular payment processors, to assess which one is right for you.

Top Criteria for Restaurant Online Payment Processing

When it comes to picking a processor, here are some of the most common features that restaurants consider.

Fees

Your restaurant’s payment gateway should improve your profit margins, not cut into them dramatically. For many restaurateurs, a gateway’s fee model is the most important factor in determining whether or not to go with them.

Some of the most common fees you’ll see are:

  • Startup fee
  • Transaction fee. This is typically a percentage plus fixed fee, for example 4% plus 30 cents for every transaction.
  • Monthly fee
  • PCI compliance fee
  • Chargeback fee
  • Termination fee

Look for a payment gateway that doesn’t charge at every step of the way. Their success should depend on yours; they shouldn’t make money unless you do.

Fraud Protection and PCI Compliance

You’ve heard the stories of data breaches and cyberattacks. Unfortunately, they’re all too common in today’s world. Not only do they take a huge toll on small businesses — according to a 2018 report from Verizon, 58% of cyberattack victims were small businesses —  but they also harm the customers who support those businesses. That’s not something you want for your restaurant patrons.

Your restaurant’s payment processing system should add to your bottom line — not your worries. This is one of the biggest value-adds of going with an established payment processor: not having to wonder if you’re obeying all laws and protecting all data. 

According to the payment processor Stripe (with whom we partner to offer online payment processing through MenuDrive Pay), only about 3% of global commerce happens online. That’s an astonishingly low number considering how online we are! They explain, “Regulatory complexity, a byzantine global financial system, and a shortage of engineers are constraining the impact of the internet economy.” 

Fortunately, companies like Stripe are taking the onus of navigating that byzantine system, so small businesses and local restaurants don’t have to deal with it.

Online Ordering Integration

Your payment processor should integrate with your other systems, such as your online ordering platform or your point-of-sale system. (LavuPay, our other certified payment gateway offered through MenuDrive, fully integrates with Lavu Point of Sale.) Top efficiency depends on streamlined operations. Streamlined operations, in turn, can only exist if your platforms work together. 

Here’s how Kevin Brolan puts it in QSR Magazine

“… Investing in an updated restaurant POS system and embracing smart payment features have benefits that go beyond merely enhancing your payment processing strategy. These tools streamline processes so that business operations are faster, smoother, and more convenient for everyone involved. And in our opinion, anything that contributes to a great customer dining experience is a worthy investment.”

We couldn’t agree more!

As a general rule of thumb, it’s good practice to look for a payment processor that has integrations. It gives you more options as a restaurateur, and it means the platform is flexible and adaptable.

Ease of Use

As the experts at Merchant Maverick put it, “There’s an easy way to set up an online business, and there’s a hard way. The hard way involves working with APIs that require computer programming skills, and the easy way is to add some readily-prepared code to your website yourself.” 

There’s actually an even easier way: having payment processing already embedded into your online ordering platform. Once you have an account, all you have to do is complete a basic application. You’ll be able to start accepting online payments in hours if not minutes, no coding needed.

What else should you be on the lookout for? 

Here are a few other features to keep in mind as you pick a payment gateway for your restaurant.

  • Speed of service. Look for a processor that lets you complete your application fast and get paid fast. Your restaurant’s processor should let you start selling your menu items quickly, and funds should reach your bank account without any holdups.
  • Commitment and cancellation conditions. If we learned one thing in 2020, it was that we can’t ever truly know what’s around the corner. Look for a gateway that doesn’t tie you into inescapable long-term commitments or that charges an arm and a leg for contract cancellation.
  • No processing limits. You should be able to accept as many online payments as your customers are ready to make!
  • Handles chargebacks and refunds. Your customers should know they’ll never be charged unfairly.
  • Instant reporting. Look for a system that lets you check up-to-date sales reports any time of day or night.

Some Popular Payment Processors

Not sure where to get started? You can always ask a MenuDrive payments specialist for guidance (although full disclosure, we obviously want to be the ones to set you up for online ordering and payment processing success!). Here are some of the big names in online payment methods:

  • Stripe — Our partner for MenuDrive Pay, Stripe is used by companies including Lyft, Amazon, and Shopify. Unlike some other gateways, Stripe was built for the internet; it didn’t start as an in-store processor and then migrate online. Merchant Maverick calls it “a media darling” with “hip, trail-blazing co-founders,” but we like it because of its robust tools and easy-to-use-yet-excellent system.
  • CardConnect — We partner with CardConnect for LavuPay, our other payment gateway that is optimized for use with MenuDrive. Merchant Maverick reports that “CardConnect’s payment gateway, virtual terminal, and mobile payments products are all high-quality offerings.” They use patented, PCI-validated security measures to ensure compliance. 
  • PayPal — Possibly the most famous name in online payments, PayPal has flat-rate pricing, with reduced rates for 501(c)(3) organizations.
  • Authorize.net — A subsidiary of Visa, Authorize.net earns high marks from Capterra for ease of use. TheDigitalMerchant.com has a good breakdown of Stripe vs. Authorize.net (although it should be noted that Stripe does offer advanced fraud detection, unlike what the article says). 
  • Square — The popular Square application is more known for in-store payments, although they do have an e-commerce platform, Square Connect.
  • Cayan — Here’s what PC Mag says about Cayan: “Cayan does a solid job as a payment processor, delivering a good range of hardware and software combined with an open API. While you’ll need to negotiate a fair price, if that hurdle doesn’t bother you this service is well worth a look.”

When doing your research, be sure to check reviews on reputable sites. If possible, talk to other restaurant owners to get their take on what has worked for them.

Whichever payment gateway you end up going with at your restaurant, remember that online payments don’t just provide a means to make money. They grow your business and support your industry. Who could argue with the importance of that?

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